Hey! Where did everybody go?

El Periodico

President Otto Perez Molina's right-hand men has resigned in Guatemala. Interior Minister Mauricio Lopez Bonilla submitted his resignation earlier today. Secretary of Strategic Intelligence Ulises Anzueto and Minister of the Environment Michelle Martínez also resigned. There might be more before the end of the day.

I was surprised that Baldetti resigned without formal charges against her. Her resignation might have been a little damage control and a little she couldn't take the pressure. However, thousands of protesters demanded President Otto Perez Molina's resignation as well. He said no; he had no intention of submitting his resignation.

The number of protesters then increased from 20-30,000 to upwards of 60,000. I still thought that Perez might have been able to weather the storm. However, CICIG and Guatemalan prosecutions made several arrests yesterday involving another $100 million+plus fraud ring more closely connected to the president. This time, it was his former private secretary. That did not look good for him. But there's more.

Guatemalans have been frustrated with poor health care services for some time. Yesterday's fraud actually led directly to the deaths of several patients. While one could be outraged at the theft of millions in customs' duties, that involved corrupt businessmen bribing corrupt government officials, stealing from the Social Security Institute and hospitals is much more tangible, in my opinion, and therefore much more likely to lead to the president's ultimate removal.

Former Central American president runs from corruption allegations

Corruption allegations mount against former Panamanian President Ricardo Martinelli.

But now Martinelli is being investigated on suspicion of stealing money from a $45-million contract to buy food for schoolchildren as part of a National Action Plan (PAN) against poverty.

- Luxury cars, apartments, yacht -

Investigators also allege corruption on an airport parking lot program and a contract with a tax collection firm.

[President Juan Carlos] Varela says the total stolen during his predecessor's administration is nearly $100 million.

Prosecution documents seen by AFP say that money was used to buy luxury cars, apartments and a yacht.

Several Martinelli allies have already been arrested and it seems only a matter of time before authorities move against Martinelli. In many ways, prosecutors in Panama appear to be pursuing a similar model to that used in Guatemala - go after the small fish before moving on to those at the top of the food chain. While not technically on the run, his whereabouts remain unknown.

His whereabouts are unknown, but he keeps up an active presence on Twitter, where he recently posted a picture of himself with a palm-tree-lined beach in the background, with the caption: "Watching a beautiful sunset with two of my sisters."

He also uses the platform to taunt his successor and former ally, President Juan Carlos Varela, whom he accuses of "politically persecuting" him.

He doesn't seem to be taking the allegations very seriously, arguing instead that it is all a part of a big smear campaign.

Vice President resigns under dark clouds in Guatemala

Guatemala's Supreme Court ruled that Congress could strip Roxanna Baldetti of her immunity as they investigate her ties to the recent discovery of a $100 million-plus customs fraud case involving her private secretary. Congress then formed a five-person committee to issue a recommendation. The Constitutional Court then upheld the Supreme Court's decision Friday morning.

At the same time, Guatemalan authorities arrested five lawyers who had won bail for their clients after allegedly bribing Judge Marta Sierra Stalling. They are now in the process of having the judge's immunity lifted as well.

The big event of the day, however, was the resignation of Vice President Baldetti. She has yet to be formally accused of any involvement in the corruption scandal but I assume that's only a matter of time. At best, her private secretary oversaw the looting of $100 million from the people of Guatemala right under her nose. I'm not sure anyone can seriously believe that to be the case. She has been connected to unexplained wealth for the entire term.

With a sober expression on his face, Perez Molina said Roxana Baldetti had abandoned her offices in the presidential palace and he was informing congress. He called the decision "brave" and thanked her for her service.

"Her resignation is due to a personal decision with the only interest being to leave her office voluntarily, to submit herself to and cooperate with whatever investigations may be necessary and above all within the due process," Perez Molina said.

Baldetti is the first Guatemalan vice president to step down due to a corruption case, although prosecutors have not implicated her in the scandal and she denies involvement.

Otto Perez Molina has also been connected to unexplained wealth during his years as a congressman and, more recently, as president. Therefore, the scandal is unlikely to end with the vice president's resignation. As I speculated three weeks ago when the scandal broke, "there have to be questions concerning the ability of the president and vice president to serve out the remaining months of their terms."

One question has been answered.

"Out! Out! Out!"

Plaza Publica

Thousands of protesters turned out in Guatemala City to demand the resignation of President Otto Perez Molina and Vice President Roxana Baldetti .

Protesters gathered for the demonstration, which they dubbed "Give Up Already," banging pans and blowing whistles as they marched to the National Palace waving the Guatemalan flag.

"We do not want thieves to continue to rule us, to see us as toys, it is brazen what they do with the people of Guatemala," protester Maria Letona told AFP.

PanAm Post gives a number of 15,000 protesters but it's not clear where that estimate comes from. (Update: 20,000 - 30,000 maybe but nothing official). That's a pretty significant number but probably not enough to force either the vice president or president to resign at this time. We'll have to see where the protests go from here. Either way, I'm impressed with the turnout by Guatemalans demanding the resignations of the president and vice president. A remarkable day.

I know I shouldn't be but I'm still amazed that this level of corruption is going on eight years into CICIG's mandate, especially if the fraud goes directly to Perez Molina and Baldetii as most seem to suspect. It's possible that the vice president and the president won't be able to complete their terms in office but we are going to need additional evidence that they are the individuals referred to on the SAT audio tapes provided by the Public Ministry and CICIG.

I'm wondering how much the SAT scandal hurts Obama's aid plan for the Northern Triangle. Members of the US Congress have been pretty outspoken in sharing their concerns about providing our Central American partners with additional sums of money at the same time that we know so much corruption is occurring in the region. Vice President Biden seemed to condition aid on an extension of CICIG's mandate. That would be one way that Guatemalan political elites could demonstrate their commitment to tackling corruption.

CICIG's mandate was eventually extended but only because they went public about corruption leading all the way up to the vice president's office, if not higher. I'm not sure that is what they had in mind.

Corruption: It's always a social program, isn't it?

Allegations of corruption plagued Ricardo Martinelli's term as president of Panama. One of President Juan Carlos Varela's first priorities upon taking office last year was to investigate any irregularities that had occurred under his predecessor. On Wednesday, in a unanimous vote, Panama's Supreme Court voted to appoint a special prosecutor to launch a corruption investigation into the former president.

While there have been several allegations over the years, including kickbacks from an Italian military contractor involving Martinelli's family, the special prosecutor in this case only seems to be charged with investigating kickbacks from a government social program, the National Assistance Program. Why a billionaire would need to skim a few million dollars from government coffers is beyond me.

Two former heads of the program, Rafael Guardia and Giacomo Tamburelli, have implicated Martinelli in the scheme to inflate government contracts. Martinelli, meanwhile, is in Guatemala right now where he is attending a meeting of PARLACEN.

It's always a social program, isn't it?

Panamanian Supreme Court justice suspended

Like every other recent administration in Central America, there were a number of allegations of corruption and abuse of power during Ricardo Martinelli's presidency - infrastructure spending kickbacks and court packing to name two.

Well, there's some movement in Panama right now to hold one Supreme Court Justice accountable for some unexplained wealth accrued during the last few years.

Alejandro Moncada has for weeks been battling accusations he profited from his ties to the former conservative leader after documents emerged showing he paid mostly in cash for two luxury apartments valued at over $1.7 million. Such properties are seemingly incompatible with Moncada's $120,000 a year salary and don't show up in a sworn affidavit delivered shortly before joining the bench in 2010 in which he declared a 4x4 truck and an expensive watch as his only assets.

As part of the ruling by lawmakers leading an impeachment probe, Moncada's assets were temporarily frozen. He was also ordered to turn over his passport and remain confined to his residence.

Moncada denies any wrongdoing and said he's the victim of a campaign by Martinelli's political foe and successor, President Juan Carlos Varela, to reshape the nine-member high court.

They are looking for revenge because I did not let them put an inmate in this place...whom they wanted to assassinate

Prensa Libre

Guatemalan authorities, with the help of the International Commission Against Impunity in Guatemala (CICIG) arrested, Byron Lima Oliva, an army captain serving time for the murder of Bishop Juan Gerardi, and Edgar Camargo, director of the Guatemalan Penitentiary System. Camargo was arrested on charges of conspiracy, bribery and conspiracy to launder money. Twelve other individuals were also implicated in the organized crime racket, although it is not clear if they were all arrested.

Lima, on the other hand, is the big catch.

Prosecutors said Wednesday that Byron Lima Oliva took money from other inmates in return for favors such as prohibited cellphones and appliances, as well as special food and conjugal visits.

"Lima represents for many of the inmates the true authority, and so they turn to him to seek transfers, favors and rights. Lima Oliva exerts undoubtable influence in the penitentiary system," Ivan Velasquez, head of the U.N. International Commission Against Impunity in Guatemala told reporters.

CICIG's Ivan Velasquez, Attorney General Thelma Aldana and Interior Secretary Mauricio Lopez Bonilla announced that the investigation was launched last year. If you remember, Lima was apprehended last February while going to the dentist. He seemed to have been able to come and go from the prison whenever he desired. Perhaps, he was traveling in his Porsche, Jaguar or armored Land Rover to one of the many properties he acquired while in prison? Maybe even his beach property which Lima says that Lopez Bonilla has visited.

How did Lima respond to the charges?

Reached by phone, Lima denied the allegations and said he is the target of a vendetta by government officials because he prevented extortion and other crimes in the prison.

"They are looking for revenge because I did not let them put an inmate in this place ... whom they wanted to assassinate," Lima told The Associated Press.

The possible fallout?

Lima, 44, has boasted in the past of having a friendship with current President Otto Perez Molina, also a former soldier, and says he had campaign T-shirts printed for the 2011 election. On Wednesday, he said he also provided the campaign with money from businessmen, delivered through Lopez Bonilla.

The president's office declined to comment Wednesday.

When Lima was taken into custody last February, he and his entourage were traveling in vehicles used by the Patriotic Party during their 2011 campaign.

If Byron Lima built this empire over the last fifteen years, as has been alleged, there are hundreds of people, perhaps more, complicit in this single case.

(Yahoo, Fox News Latino, ABC News, The Globe and Mail / AP)

Corruption in the Northern Triangle: The siren song of crime

Ivan Briscoe has a new report on Corruption in the Northern Triangle: The siren song of crime.

More than ever, it seems clear where Central America’s people and government should direct their efforts: to controlling money laundering, stiffening the autonomy of oversight bodies, bringing development to border regions, and eliminating graft from security forces and judiciaries. But in democracies where money and fear are important sources of mobilization, achieving public backing for these policies requires making lucid, tangible connections between progress in combating civil insecurity and improvements to the integrity of the state. It is this virtuous cycle that is needed to replace the current vicious cycle of emergency, militarization and crime, and the siren song of the ice-cream bell.

It is the third installment on a three part series for The Broker. Pien  Metaal and Liza ten Velde produced Drugs and violence in the Northern Triangle: Two sides of the same coin? while Wim Savenije and Chris van der Borgh wrote Anti-gang policies and gang responses in the Northern Triangle: The evolution of the gang phenomenon in Central America.

You can also check out Bastiaan Engelhard's Preventing crime and violence is better than fighting it.

Happy Labor Day!

Portillo and Flores probably not only Central American heads of state to have received kickbacks from Taiwan

Boz and I spoke with Jan-Albert Hootsen for his recent story on China and Taiwan’s Secret Battle for Central America.

Flores is one of a number of Central American officials and former heads of state who have recently been accused of getting kickbacks from Taiwan roughly a decade ago. Analysts say the money is part of a silent diplomatic tug-of-war between the island and mainland China over Central America, where both countries are fighting over natural resources and Taiwan’s status as an independent country.

China and Taiwan have been playing out their differences in Central America for quite awhile. During the Cold War, military officers from the region (at least Guatemala) traveled to Taiwan for training. It seems as if guerrillas traveled to communist China but it's not exactly clear what the received from them other than a nice tour. Taiwan gave its support for the region's peace processes in the 1990s with economic assistance. They've been going at it ever since.

But analysts say the battle for Central America is far from over. Some think China is now throwing enormous sums of money into Central America to eventually buy loyalty away from Taiwan without actually violating the truce. And in the long run, there’s no way the island neighbor can compete with its larger and wealthier neighbor.

That could spell major trouble for the island if the current truce with China fails. Which is why even though the Portillo and Flores bribes allegedly happened roughly decade ago, some analysts think Taiwan may still be playing dirty. As Mike Allison, a professor of political science at the University of Scranton, says: “[Portillo and Flores] are probably not the only heads of state in Central America to have received kickbacks from Taiwan or simply pocketed donations meant for their citizens.”

There have been several scandals involving misappropriated money from Taiwan, including Costa Rica and several Caribbean countries, over the last decade-plus. I'm not sure that the competition has increased. I'm more comfortable saying that it has just been going on under the radar.

And some people thought this was going away after the elections

According to the BBC, more troubling information is coming to light against former president of El Salvador, ARENA's Francisco Flores.

El Salvador President Mauricio Funes has said there is new incriminating evidence against former President Florencio Flores, who is facing corruption allegations.

Mr Funes said prosecutors in Costa Rica found bank accounts in the name of Mr Flores.

The former president had denied under oath having any accounts abroad.

The government accuses Mr Flores, who governed between 1999 and 2004, of misusing funds donated by Taiwan.

Mr Flores told a congressional panel in January that he had received cheques worth $10m (£6.5m) from Taiwan during the last two years of his presidency.

But Mr Flores denied the funds were for his personal use. He said Taiwan donated the money to El Salvador.

"I would like to say that I have never deposited a cheque from Taiwan's government in any account; that is key for me, to make clear that I have never deposited a cheque from Taiwan's government in any account," Mr Flores told the congressional panel set up to trace the money.

But Mr Funes said that Costa Rica "will send the documents of the Flores case" this week.

"According to Costa Rican Attorney General [Jorge Chavarria] there are bank accounts in the name of President Flores in Costa Rica," said Mr Funes in his radio programme, Conversando con el Presidente.

Former Guatemalan President Alfonso Portillo is serving time in the US for corruption-related crimes involving cash payoffs from the government of Taiwan. Francisco Flores looks to have done the same. Given some of the statements made by Portillo and Flores, they are probably not the only heads of state in Central America to have received kickbacks from Taiwan or simply pocketed donations meant for their citizens.

If Flores is charged and convicted in El Salvador, what's the likelihood that we will see other former heads of state cut deals to avoid the same sort of criminal investigation and prosecution? Is the likelihood that they will be investigated and prosecuted still so low that they will play the odds?

Potential fallout from another ARENA corruption scandal

Boz has some thoughts on the fallout from corruption allegations against Francisco Flores in El Salvador. You might as well read all four points. The investigation into former ARENA president Flores seems to have been going on for a year or more but has really picked up steam since September. The investigation could be because of campaign season prior to the February 2nd elections (probably) or because of US pressure on the Funes government to crackdown on corruption as a condition of a second Millennium Challenge Corporation Compact. Senator Leahy and others remain disappointed with the slow pace of cleaning up El Salvador's institutions after years of ARENA governance.

Obviously the motivation could be a little or a lot of both. Or it could simply be coincidence - the investigation had been going on for some time and with information from the US, the government went public when it could. Regardless of whether the corruption allegations are true, Funes' public comments have politicized the investigation in El Salvador and might have angered some US government officials for revealing details to the public.

Francisco Flores isn't the only former president in trouble for allegedly taking a little off the top of Taiwanese donations. Former Guatemalan President Alfonso Portillo is in a US jail in part for stealing from Taiwan's multi-million dollar donation to Libraries For Peace. That's right, stealing from school children.

Murder and corruption in Panama

Over 100 police officers accused of criminal activities, including the shooting and killing of unarmed civilians, have avoided prosecution during the current government because of Law 74 (See here, here, here and here.) Human rights advocates have asked for the repeal of Law 74 which protects police from prosecution.

In the meantime, prosecutors are now awaiting a decision to move ahead with homicide trials for twenty-four National Police officers. Several of the accused are on desk duty while others are "under office arrest, similar to house arrest." None of the twenty-four officers are in jail.

Obviously I don't want to overemphasize the implications but a decision to prosecute and convict a number of the accused will go a long way to demonstrating that no one is above the law in Panama.

Panama's Corruption Perceptions Index score from Transparency International recently dropped from 38 in 2012 to 35 in 2013, tied for 102nd in the world.

According to Haley Moncrief with BNamericas

Panama's economic growth and heavy investment in infrastructure projects like its US$5.25bn Panama Canal expansion is attracting investors' attention. The country is also the fastest growing in Latin America, boasting an average annual growth rate of 8.5%, and per capita GDP has more than doubled in the last decade, according to the International Monetary Fund (IMF).

Attracting foreign capital and companies has been a main priority of the administration of President Ricardo Martinelli. Yet a daunting and worsening corruption perception could thwart the country's efforts to reel in foreign capital, and taint its growing appeal.

Some of the country's corruption woes include a lack of judicial independence, issues with transparency - particularly regarding availability of Panamanian companies' ownership information - as well as the availability of accounting information regarding entities that do not receive Panamanian-source income.

I'd say that it probably doesn't help that several of the developing corruption scandals are tied directly to the president, members of his family, his administration and his political party. It's tough to see which of the charges are going to stick but the allegations can't help the perception of corruption in Panama.